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ICICI Bank's profit up 44 percent on loan growth

ICICI Bank's profit up 44 percent on loan growth

April 28th, 2011 by ERIKA KINETZ, AP Business Writer in News

MUMBAI, India (AP) - Quarterly profit at India's ICICI Bank surged 44 percent as strong loan growth and higher fee and interest income made up for losses on treasury trading and higher employee costs.

Profit for the January to March quarter was 14.5 billion rupees ($326 million), while total revenue rose 14 percent from last year, to 88.0 billion rupees ($2.0 billion).

"We said two years ago that we would focus the financial year 2010 on consolidation and by the year 2011 we would resume growth," said chief executive Chanda Kochhar. "This is clearly what we have done."

Asset quality at India's largest private bank continued to improve, with the non-performing loan ratio falling to 0.94 percent.

Kochhar forecast loan growth of at least 20 percent this fiscal year, despite rising interest rates in Asia's third largest economy, which tend to sap demand for credit.

She said the bank began to increase retail loans slightly during the quarter, after trimming retail credit for two years.

Volatile trading of government securities resulted in an unanticipated 2.0 billion rupee ($44 million) loss during the quarter.

Kochhar said expenses would continue to rise as the bank resumes its growth trajectory, but will not result in deterioration of cost to asset or cost to income ratios.

Staff costs accounted for much of the rise in expenses. After several years of slashing costs, the bank gave employees an 8 percent average salary hike in the year ended March and plans to raise wages 12 percent, on average, this fiscal year.

Kochhar said the decision was taken "in view of the performance of the bank, the growth prospects and the inflation in the country."

The stock rose 1.7 percent in midafternoon trade on the Bombay Stock Exchange.